HealthEquity Stock Gains as Q3 Earnings Beat Estimates, Revenues Up Y/Y

HealthEquity, Inc. HQY reported adjusted earnings per share (EPS) of $1.01 for third-quarter fiscal 2026, surpassing the Zacks Consensus Estimate by 12.2%. The bottom line improved 29.5% on a year-over-year basis.

GAAP EPS in the fiscal third quarter was 59 cents, up from the year-ago quarter’s EPS of 6 cents.

Shares of HQY gained 2.4% in after-market trading following the earnings call.

HealthEquity Revenues in Detail

In the fiscal third quarter, the company generated revenues of $322.2 million, which beat the Zacks Consensus Estimate by 0.7%. The top line improved 7.2% from the prior-year quarter.

HSA Details of HQY

As of Oct. 31, 2025, the total number of Health Savings Accounts (HSAs) for which HealthEquity served as a non-bank custodian was 10.1 million, up 6% year over year.

HealthEquity reported 802,000 HSAs with investments as of Oct. 31, 2025, up 10% year over year. Total accounts, as of Oct. 31, 2025, were 17.3 million. This uptick included total HSAs and 7.2 million Consumer Direct Benefits (CDBs).

Total HSA assets were $34.4 billion at the end of Oct. 31, 2025, up 15% year over year. This included $16.9 billion of HSA cash and $17.5 billion of HSA investments. This figure compares to our fiscal third-quarter HSA cash and HSA investments projection of $18.3 billion and $13.5 billion, respectively. We had projected total HSA assets of $31.9 billion for the fiscal third quarter.

Client-held funds, which are deposits held on behalf of HealthEquity’s clients to facilitate the administration of its CDBs and from which the company generates custodial revenues, were $0.8 billion as of Oct. 31, 2025.

Revenue Sources of HealthEquity

HealthEquity derives revenues from three sources: Service revenues, Custodial revenues, and Interchange revenues.

Service revenues totaled $120.3 million in the quarter, up 0.1% year over year. This reflected a higher number of HSAs and invested HSA Assets. This figure compares favorably with our fiscal third-quarter projection of $121.9 million.

Custodial revenues totaled $159.1 million, up 12.9% from the year-ago period. Our projection for the fiscal third-quarter Custodial revenues was $140.4 million.

Interchange revenues totaled $42.8 million, up 0.6% year over year. This figure compares favorably with our fiscal third-quarter projection of $52 million.

HealthEquity, Inc. Price, Consensus and EPS Surprise

HealthEquity, Inc. price-consensus-eps-surprise-chart | HealthEquity, Inc. Quote

HQY Margin Details

In the quarter under review, HealthEquity’s gross profit rose 15.8% year over year to $228.1 million. The gross margin expanded 520 basis points (bps) to 70.8%. We had projected the gross margin to be 63.2% in the fiscal third quarter.

Sales and marketing expenses increased 7.8% to $24.4 million year over year, whereas technology and development expenses climbed 9.5% year over year to $65.9 million. General and administrative expenses decreased 2.9% year over year to $30.9 million. Total operating expenses of $149.4 million decreased 1.5% year over year.

Operating profit totaled $89.6 million, improving significantly by 300.1% from the prior-year quarter, mainly driven by lower service costs and merger integration expenses. Thus, the operating margin in the quarter expanded by a huge 1790 bps to 24.4% compared with the prior-year quarter.

Financial Position of HQY

The company exited the third quarter of fiscal 2026 with cash and cash equivalents of $309.3 million compared with $304.5 million at the second quarter of fiscal 2026-end. Total debt (net of issuance costs) at the end of third-quarter fiscal 2026 was $982.1 million compared with $1.01 billion at the end of second-quarter fiscal 2026.

Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2026 totaled $339.2 million compared with $264.1 million a year ago.

HealthEquity FY26 Guidance

HealthEquity has updated its revenue and EPS projections for fiscal 2026.

For fiscal 2026, revenues are now projected to be between $1.302 billion and $1.312 billion compared with the previous guidance of $1.290 billion and $1.310 billion. The Zacks Consensus Estimate is currently pegged at $1.31 billion.

Adjusted EPS is now expected to be in the range of $3.87-$3.95 compared with the previous guidance of $3.74-$3.91. The Zacks Consensus Estimate currently stands at $3.73.

Our Take on HQY

HealthEquity exited third-quarter fiscal 2026 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter is promising. Significant improvements in operating and gross margins also bode well.

HealthEquity management noted that the company opened approximately 175,000 new HSAs during the quarter, a result supported by strong new-client activity, solid retention and continued adoption of HSA-qualified plans across employers. They highlighted that enhancements to the mobile app, improved analytics and a smoother onboarding experience are driving better member engagement. These technology upgrades are helping members save and spend more efficiently, lifting satisfaction levels and supporting steady growth in both account openings and HSA assets, which remain essential to long-term revenue momentum.

Management also acknowledged that macro employment softness continues to create headwinds for HSA formation. Slower job creation and reduced workforce mobility naturally limit the pace at which new HSAs can be opened, even with a healthy sales pipeline. To offset this, the company is leaning into targeted marketing, deeper employer partnerships and improved enrollment tools. While current labor trends are keeping HSA openings more muted than preferred, HealthEquity remains confident that its technology investments, client wins and stronger engagement can sustain momentum despite a softer backdrop.

Zacks Rank & Key Picks

Currently, HealthEquity carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Medpace Holdings MEDP, Intuitive Surgical ISRG and Boston Scientific BSX.

Medpace, currently carrying a Zacks Rank #2 (Buy), reported a third-quarter 2025 earnings per share (EPS) of $3.86, which surpassed the Zacks Consensus Estimate by 10.29%. Revenues of $659.9 million beat the Zacks Consensus Estimate by 3.04%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MEDP has an estimated earnings growth rate of 17.1% for 2025 compared with the industry’s 16.6% growth. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 14.28%.

Intuitive Surgical, sporting a Zacks Rank #1 at present, posted a third-quarter 2025 adjusted EPS of $2.40, exceeding the Zacks Consensus Estimate by 20.6%. Revenues of $2.51 billion topped the Zacks Consensus Estimate by 3.9%.

ISRG has an estimated long-term earnings growth rate of 15.7% compared with the industry’s 11.9% growth. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.34%.

Boston Scientific, currently carrying a Zacks Rank #2, reported a third-quarter 2025 adjusted EPS of 75 cents, which surpassed the Zacks Consensus Estimate by 5.6%. Revenues of $5.07 billion outperformed the Zacks Consensus Estimate by 1.9%.

BSX has an estimated long-term earnings growth rate of 16.4% compared with the industry’s 13.5% growth. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 7.36%.

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